Negotiation in the News: Breaking dysfunctional patterns – The surprisingly cooperative U.S. budget deal

By — on / Dealmaking


In negotiations with longtime counterparts, it can be difficult to overcome entrenched bad habits and past resentments. That certainly has been the case for negotiations between the U.S. Congress and the White House in recent years, which have been marked by name-calling, missed deadlines, and public ridicule. But thanks to a variety of pressures and new strategies, the parties managed to quietly and relatively peacefully negotiate a budget deal this past fall.

A window opens in the House

With the U.S. Treasury Department predicting that the government would run out of cash in early November 2015, Republican leaders were eager to reach a deal with Democrats to raise the federal debt limit and avoid the chaos and blame of a government shutdown. During a September 17 phone call with President Barack Obama, John Boehner, then the Speaker of the House of Representatives, and Senate Majority Leader Mitch McConnell raised the idea of launching negotiations on the issue, according to a Wall Street Journal article. The GOP leaders also expressed interest in negotiating a broader budget deal.

Eight days later, when Boehner surprised the nation by announcing that he would resign from the House in late October, the White House recognized that a “critical window” had opened up for negotiation with Republicans, former Senator Tom Daschle told the Journal. Given that Boehner had publicly pledged there would be no new shutdowns or debt defaults on his watch, he appeared to be motivated to do a deal. Obama was also driven to avoid a shutdown that could keep him from pursuing his goals during his last year in office.

All business, no drama

The leaders agreed to delegate the negotiations to their staffs. Seeking to avoid the mistakes of past debt-ceiling and budget talks, senior aides to Boehner, McConnell, Obama, House Democratic leader Nancy Pelosi, and Senate Democratic leader Harry Reid set clear ground rules for their negotiations, which began on September 30, according to the Journal: “No leaks, no drama.”

Given their hectic schedules and the talks’ tight deadlines, Obama and the congressional leaders never met in person during the negotiations. When they did talk by phone, they were all business. “Small talk—forget it,” Pelosi told the Journal, referring to her phone calls with Obama. “I’m busy. He’s busy. . . . Subject, problem, timing, action required, end of conversation. Decision.”

The negotiations briefly lost steam after Representative Kevin McCarthy dropped out of the race for Speaker, leaving Republicans feeling panicked. But after Paul Ryan was convinced to take on the role (see our cover story), talks picked up again.

A race to the finish

At first, the parties stayed focused on the narrow but challenging issue of negotiating to increase the debt limit before the Treasury Department’s November 3 deadline. That didn’t give them enough time to also tackle a multiyear budget negotiation, they thought.

Yet on October 22, Boehner and McConnell reported to Obama that they might not have enough support in Congress to pass a stand-alone debt-ceiling increase, according to the Journal. And as each party brought other interests to the table, the negotiations inevitably broadened. Boehner said he was eager to “clean the barn” for the next Speaker, for example.

Boehner tasked the staff negotiators with reaching a two-year budget deal before Ryan was to be sworn in as speaker on October 28. The race was on, but fortunately for the parties, much of the advance work had been done for them; they pulled in changes to Social Security Disability Insurance that Ryan had worked out while chairing the Ways and Means Committee, for example. After a long weekend of talks, the negotiators were able to post a budget bill to the House Rules website during Ryan’s swearing-in ceremony.

The final two-year budget deal, which passed the House and Senate easily despite some conservative opposition, incorporated compromises from both Democrats and Republicans. Achieving a net reduction in the deficit, the budget raised federal spending by $80 billion over two years and added $32 billion to an emergency war fund, offset by cuts to Medicare and Social Security disability benefits and revenue from other programs. Finally, the debt limit was raised until March 2017, freeing Obama from future battles over the issue.

Guidelines for a fresh start

Several characteristics of the budget deal could help you shed self-destructive patterns with perennial partners:

  • Recognize changed incentives. The White House made a commitment to negotiation after realizing that Boehner’s resignation gave him a strong motivation to do a deal. When situational factors could make a counterpart more flexible than usual, try to negotiate before critical windows close again.
  • Negotiate the terms of engagement. Explicitly agreeing up front that leaks and drama were forbidden allowed the government negotiators to set clear parameters for acceptable behavior. By negotiating ground rules, parties can address and overcome their destructive tendencies.

Show a dedication to delegation. The leaders wisely handed off responsibility to their staffs and stepped in only to make key decisions. When they did talk, the leaders’ long familiarity with one another allowed them to skip the small talk and stay on task.

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